MUMBAI: IDBI Bank has said that it has accepted the one-time settlement offer by Siva Industries’s promoters — a part of Aircel founder C Sivasankaran’s group — as it would lose more money otherwise.
IDBI Bank had initiated bankruptcy proceedings against Siva Industries in 2019. The loans were availed by a group company that later merged with Siva Industries. Sivasankaran is facing investigations by the authorities for causing a loss to banks.
According to banking sources, IDBI Bank has already written to the CBI, which has confirmed that commercial dealings will not affect the criminal investigation process.
“Recovery for the bank through one-time settlement will be higher vis-a-vis recovery through NCLT liquidation based on the valuation of assets available as security. This OTS (one-time settlement) and exit from NCLT does not prejudice the CBI complaint. The case with CBI continues,” IDBI Bank said.
Lenders led by IDBI Bank, with claims of over Rs 5,000 crore, had initiated bankruptcy proceedings against the company. International Asset Reconstruction Company held 22% of the admitted debt followed by IDBI Bank (17%) and Union Bank of India (12%). LIC, SBI, Yes Bank and Bank of India were the other lenders.
According to a report in ET, a Mauritius-based investor Royal Partners had complained that its bid for the company was deliberately ignored. However, IDBI Bank has said that the OTS offers it a better deal. While the insolvency process does not allow defaulting promoters to acquire their company, bankers can do a one-time settlement with lenders if enough of them agree.
IDBI Bank responded to allegations in a statement on social media where it said that although Siva Industries was referred to the NCLT by lenders in July 2019, there was no successful resolution applicant. “The promoter/shareholder made a one-time settlement offer which was higher than the liquidation value. Creditors voted in favour of the settlement in the first week of April 2021.” It added that the NCLT is yet to approve the settlement.